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Bonds softer on weaker rand

Feb 04 2013 12:37

I-Net Bridge

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Johannesburg - The bond market was softer in midday trade on Monday on a weaker rand. Dealers said the release of the new consumer price index (CPI) weights at 09:00 had no effect on the bond market as it had already been priced in.

“The rand is the main factor today as the CPI weights had already been priced in‚” a local bond dealer said.

At 11:36 the benchmark R186 was trading at 7.360% from 7.280% at Friday’s close. The R157 was trading at 5.335% from 5.315% at its previous close and the R207 was bid at 6.365% and offered at 6.335% from its previous close of 6.295%.

The rand was last bid at R8.9198/$ from R8.8527/$ at Friday’s close and R8.9597/$ at Thursday’s close.

The total weight of food on the new CPI for all urban areas has been adjusted upwards to 14.2% from 13.6%‚ Statistics SA said when releasing the 2012 CPI weights on Monday.

The new weights will apply on the January 2013 reading of CPI due this month.

The housing and utilities sub index will account for 24.5% of the new CPI basket from 23.2% before‚ reflecting where most of household incomes go.

The sub index includes spending on actual rentals for housing‚ owners equivalent rent‚ maintenance and repair‚ water and other services‚ as well as electricity and other fuels.

Eskom has applied to the National Energy Regulator SA for electricity tariffs to be increased by 16% every year for five years. The regulator is yet to announce its decision.

The weight of the transport sub index has fallen to 16.4% in the new CPI basket from 19.2% before‚ while that for miscellaneous goods and services increased to 14.7% from 13.5% previously.

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